Connect with us

Investments

Mid-Cap ETFs: Growth And Stability At A Better Value

Published

on

Mid-cap stocks – those with market capitalization between $2 billion to $10 billion – are less known than large and small cap stocks, but they can provide profitable investments, according to investment experts.

Quality, stability and value are typically associated with large cap stocks. Growth is usually associated with small-cap stocks. Mid-cap stocks tend to be ignored, despite the fact that such stocks have been among the best-performing equity groups since the beginning of the 21st Century, to Todd Shriber, ETF editor at Benzinga, writing in Investopedia.

Mid-cap companies are also more diversified than their small-cap peers, allowing many mid-sized companies to generate more consistent revenue and cash flow and provide more stable stock prices, according to Tom Lydon, writing in ETF Trends. Additionally, the mid-caps are not so big that their size would slow down growth.

The mid-caps segment outperformed large-caps, but with less volatility than small caps, Lydon added. The returns of mid-caps have also beaten those of small-caps during the trailing three-, five-, and 10-year periods, with less volatility.

In addition, mid-cap stocks spare investors the burden of picking stocks while providing the advantages of dividends.

What Makes A Mid-Cap Stock?

While market capitalization is based on market price, a stock priced over $10 is not necessarily a mid-cap stock, according to Investopedia. Analysts multiply the current market price by the current number of outstanding shares to calculate market capitalization.

If company A has 10 billion outstanding shares at $1, its market capitalization is $10 billion. If company B has 1 billion outstanding shares at a $5 price, its market capitalization is $5 billion. While company A has a lower stock price, its market capitalization is higher. Company B may have a higher stock price, but it has a tenth of the outstanding shares.

What Mid-Caps Offer Investors

Most financial advisors suggest a mix of low-, mid- and large-cap stocks to have a diversified portfolio, but some investors believe mid-cap stocks diversify the risk in addition to diversifying the portfolio.

Small-cap stocks, which offer the most growth, have the most risk. Large-cap stocks, which are the most stable, offer lower growth. Mid-cap stocks offer a hybrid of small-cap and large-cap stocks, a balance of stability and growth.

What To Look For

The most important thing to consider when searching for mid-cap stocks is potential for growth, according to Wall Street Survivor. Investors should seek companies that can grow faster than their larger peers in the industry, thereby gaining market share.

The company should be a largely undiscovered stock, giving it a cheaper valuation. Mid-caps that have low leverage and higher growth profiles that the market has not realized are good choices.

Investors in mid-cap ETFs must be sure the ETF they choose is not a misrepresented large-cap fund, Shriber noted.

A Model Mid-Cap Stock

Shriber observed the dividend yield for the underlying index for WisdomTree MidCap Dividend Fund (DON) is just under 3%, which surpasses the S&P 500 or 10-year Treasuries corresponding yields.

DON also compares favorably against S&P MidCap 400 Index, Shriber noted, which yields just below 1.3%. In addition, the weighted average market value of its holdings is around $5.2 billion, $16 billion under DON member firms’ weighted average market value.

DON delivers risk-adjusted returns, which is what matters, Shriber noted. Over the past three years, DON is 43.7% higher, versus the S&P MidCAP 400’s 35% gain. In addition, DON has been roughly 10% less volatile compared to the S&P MidCap 400.

Since March 2009, when the current bull market began, DON rose more than five-fold, surpassing the S&P MidCap 400.

Weighting Matters

Up 3.4% in 2017 and posting record highs, DON distinguishes itself in that more than 400 of its holdings are weighted to reflect the proportionate share of aggregate cash dividends that each component company is expected to deliver in the coming year. This projection is based on the most recently declared dividend per share.

DON’s weighted average market value holdings at the end of the first quarter were $7.1 billion, which is less than half of the Vanguard Mid-Cap Growth ETF’s weighted average market value. DON’s weighted average market value was roughly $1.8 billion over the S&P MidCap 400 Index.

DON’s 400 holdings are weighted by dividends, compared to mid-caps weighted by market value. Weighting by market value provides a large-cap fund in disguise as prices increase, Shriber noted.

The WisdomTree MidCap Dividend Index, DON’s underlying index, in the past six years has beaten the CRSP index by more than 35%.

WisdomTree noted that the 35% indicates the selection of the mid-cap is critical, rather than which mid-cap indexes will perform best over the next six years, which is not known at the present time.

While many indexes are named “mid-cap,” there is a significant difference in performance.
21.3% of the DON fund’s weight is allocated to consumer discretionary names. The CRSP index, by contrast, allocates less than 24% of its weight to consumer sectors.

DON allocates 29.1% to industrial and real estate names to improve its dividend yield to 3%, which is above average for mid-cap ETFs.

With $2.8 billion in net assets, DON generates income in a low-interest rate environment within mid-cap stocks, making it a category creator, according to Shriber. Dividends previously were considered a large-cap equity phenomenon.

A Compelling Multi-Factor Idea

Among mid-cap ETFs, Lydon of ETF Trends noted the John Hancock Multifactor Mid Cap ETF has a compelling multi-factor idea.

Hancock ETFs indexes use market-capitalization adjustments to increase the weights of smaller companies within the eligible universe and lessen the weights of larger names. The methodology indicates that the ETFs have a more equal-weight tilt with more exposure to smaller companies than traditional market-cap weighted index funds.

The Hancock ETF allocates 34% of its combined weight to industrial and technology stocks while the consumer and financial services discretionary sectors combine for 29% of the ETF’s weight. None of the 678 holdings command weights of more than 0.55%.

Hancock was among a small number of ETFs to hit record highs last week, bringing its year-to-date gain to just over 7%. The ETF debuted in September 2015 and now has more than $170 million in assets.

Investors currently have an opportunity to take advantage of the mid-cap ETFs before the benefits become more widely known.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

3.9 stars on average, based on 8 rated postsLester Coleman is a veteran business journalist based in the United States. He has covered the payments industry for several years and is available for writing assignments.




Feedback or Requests?

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Business

How Pantera Capital Engineered a 10,000% Return Investing in Cryptocurrency

Published

on

When it comes to bitcoin’s most ardent supporters, few can compare to Dan Morehead, the CEO and chief investment officer of the California-based Pantera Capital. Back in 2013, Morehead outlined a vision for what he believed was the greatest trade of a generation. Five years later, he is reporting back.

Eye-Popping Returns

Since its inception in 2013, Pantera Capital’s bitcoin fund has returned 10,136.15%, net of fees and expenses, Morehead reported Friday in a five-year anniversary post. Unsurprisingly, Morehead and fellow investment officer Joey Krug are still bullish on bitcoin. To that end, they shared two emails sent by the fund in 2013 to “share the original logic – as it is equally compelling today.”

At the time the emails were sent, bitcoin was trading at $104. It was morehead’s assertion that the cryptocurrency would spike to $5,000 because “bitcoin dominates cash, electronic fiat money, gold, bearer bonds, large stone discs, etc. It can do all of the things that each of those can. It’s the first global currency since gold. It’s the first borderless payment system ever.”

He added:

“In my opinion, it’s like deciding whether to buy Microsoft back in the day at $0.20 a share. It was hard to do when the stock was just at $0.10. In the fullness of time…clearly a great trade. I believe bitcoin right now is just like that. The world’s first global currency since gold and the world’s only borderless payments system (frictionless to boot) at a market cap of $3bn? Now that Silk Road is gone, a new wave of sophisticated investors are entering. It feels like it’s happening. A melt-up which could be orders of magnitude.”

Still a Great Time to Buy

Although Morehead incorrectly predicted bitcoin’s bottom back in May, he believes that the bear market can largely be attributed to institutions “buying the rumor and selling the fact” in anticipation of quality-regulated custodial services. In his view, bitcoin’s current price relative to its previous peak is one of the more compelling reasons to buy the cryptocurrency.

On a more fundamental level, Pantera believes cryptocurrency is the only viable method for achieving borderless payments. In the 2013 letter, Morehead described bitcoin as the first global medium of exchange since gold and the first borderless payment system ever.

Since its inception, Pantera has expanded beyond bitcoin to include companies, tokens and other blockchain-based projects. This includes launching a dedicated hedge fund to invest in blockchain companies.

At the time of writing, Pantera’s investment portfolio comprises 63 cryptocurrencies and ICO projects. In addition to bitcoin, the company has exposure to Ethereum, OmiseGo, Zcash, Ripple, ICON and Augur.

Diversification is key to ensuring Pantera picks the Amazon.com of cryptocurrency. In a March interview with CNBC, Morehead said it doesn’t matter how many failures you have insofar as you pick the one that will foster the global payment revolution. At the time, his fund’s lifetime return was 16,000%.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
3 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 53 votes, average: 5.00 out of 5 (3 votes, average: 5.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.6 stars on average, based on 551 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




Feedback or Requests?

Continue Reading

Investments

Masternodes as an Investment Vehicle

Published

on

Generally, there are thought to be only two ways to make money investing in crypto: holding long-term, or daytrading. These are the methods most often discussed, but there are many other ways as well. You can mine crypto, you can invest in crypto companies, or you can even work as a developer building solutions using blockchain technology.

The method we are going to talk about today is by using a masternode. This is the closest method to buying a dividend stock and collecting the returns, and many crypto-enthusiasts are finding it to be incredibly useful.

Explaining Masternodes

To start with an analogy, a masternode is to proof-of-stake as a miner is to proof-of-work. Rather than solving complex computational problems to receive cryptocurrency, a masternode has you “stake” a large amount of cryptocurrency and collect fees for updating and managing the blockchain.

Masternodes generally require a large amount of cryptocurrency to be staked, since this disincentivizes bad actors from costing themselves money.

The beautiful thing about masternodes is not only do you benefit from receiving coins in exchange for processing transactions, but your coins then appreciate in value. And to sweeten the deal even more, those coins can become part of your masternode and earn you more coins.

How to Run One

Now that you understand the basics of what a masternode is, it is time to think about how you would go about running one. Much like investing in an equity, you would want to do your research on which cryptocurrency you think is the best investment of your time and money. There are a lot of protocols which accept masternodes, but Dash is the most well-known one right now. The level of risk and reward you are looking for will determine your answer here, but make sure to do your own research.

Two of the main things you need to set up a masternode are storage space and an IP address. Once you have these, you will likely want to set up a virtual private server (VPS) for security purposes.

Now it is a matter of making sure you know how to use the Linux command line, or hiring a third-party service to help set up your masternode. This is your decision, but it won’t cost a lot and you don’t want to risk losing your crypto because you were overconfident in your technology skills.

To get your masternode running, buy the required amount of coins, transfer it to your desktop wallet, and download the blockchain. Now you are ready to go, but will need to look up the actual technological steps from a reliable source.

There are two major mistakes beginners make. First, they fail to keep their desktop wallet open and running 24/7, and second, they forget to configure their wallets to stake their rewards. Both of these mistakes cost rewards over time, and it is best to avoid them from the start.

Examining the Risk and Reward

As with any investment, you want to examine the risk and reward to figure out whether running a masternode on a network suits you. The risk is clear, you are putting up a significant amount of cryptocurrency. There is a slight risk of the coins being stolen, but your bigger worry is the coins go down in value. You would then have a large position in a cryptocurrency which is dropping, and would be exposed to lose a lot of money. Dash has a 1000 unit minimum, which amounts to approximately $260,000 right now. That is a huge investment and shouldn’t be taken lightly. This is where the argument can be made to invest in lower cost coins.

Returns are also important, and you should calculate the implied rate of return by looking at how many coins you are likely to earn on the coins invested. You definitely want to see more than a few percent on this, as this is a risky asset, and you should be compensated for taking the risk.

Finally, to assess your risk, look at the GitHub community and social media around the coins and see if it is relatively positive or not. The last thing you want is to buy into a sinking ship.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
1 vote, average: 4.00 out of 51 vote, average: 4.00 out of 51 vote, average: 4.00 out of 51 vote, average: 4.00 out of 51 vote, average: 4.00 out of 5 (1 votes, average: 4.00 out of 5)
You need to be a registered member to rate this.
Loading...

3.9 stars on average, based on 28 rated posts




Feedback or Requests?

Continue Reading

Altcoins

Crypto Real Estate: The Time Is Now

Published

on

If you’re a Russian oligarch, an Asian billionaire or just a simple kid from South Jersey with giant aspirations, it is time for action in the newly emerging world of crypto real estate.  Here is why.

For the average home buyer the price of a home has increased about 1.72% annually over the past 10 years.  That is just slightly more than the 1.49% rate for the U.S. economy. Things have changed somewhat in recent time and we read Case Shiller numbers placing the rate between 5%-7%.

For investors in bitcoin, the action is taking place elsewhere in the real estate world.  It is in the world of the super high-end real estate where BTC and other cryptos can play a role.

If your soul contains an ounce of cynicism, at this point,  you are probably saying what is new about the connection between crypto and real estate?  The answer is arbitrage. Never have high-end property prices been so high and crypto prices so low.  It would be a classic arbitrage to sell high-end real estate and buy bitcoin.

Natural Buyers For Bitcoin

There are plenty of statistics on housing and loads of public records revealing who owns a given piece of property.  The US government claims that 9.6 million Americans own second homes and perhaps 16% own investment property.

But when it comes to the true high-end market, global real estate is definitely in the billions. For example, take penthouse in 432 Park Ave in New York that, when new, sold for over $100 million in cash and you get the idea.  This is a market where anonymity is prized and protected. This has long represented the “no brainer” for bitcoin to gain acceptance. And best of all, it is perfectly legal medium of exchange.

Enter Propy (PRO)

Here is a company that appears to be positioned to take advantage of transactions in the global ultra high-end real estate market. Before getting started, one thing needs to be disclosed.  I neither own or am being compensated for writing about Propy. I stumbled across the name purely by accident.

Propy.com fancies itself as being dedicated to solving the complexities of purchasing property across borders.  They claim to be the world’s first international marketplace. The PRO token is built on the Ethereum ERC20 standard. Propy raised $15.4 million with their ICO last September which places a value on the company of roundly $100 million.

So PRO may not rank with the likes of Telegram but they are not exactly chopped liver either. With the spread between the price of ultra high-end real estate and bitcoin never having been greater and the perpetual need for anonymity, the team at PRO may find itself in a sweet spot no matter if the like it or not.

The First Crypto Test In Rome On June 28

CCN.com reports that PRO has managed to team up with the Hilton family-owned real estate broker Hilton & Hyland in an auction of a Roman villa named the Palazetto Mansion aiming to snatch $38 million in dollars or crypto from the buyer.  This is not first effort of its kind but it is by far the largest.

Arbitrage In The Air

Events in Rome on June 28 will be most interesting as much for bitcoin as for PRO.  This is not to say that bitcoin is the only crypto in the world, just the largest and best known. Nevertheless, the total value of bitcoin is now just a little over $114 billion so every billion of future real estate transactions will make a difference at these levels.

Perhaps this is all wishful thinking on the part of someone who owns neither PRO nor BTC but several things are obvious.  First, those folks that put their hidden billions in real estate using corporate identities are not casual investors but savvy players with lots of high priced advisors.  Arbitrage spreads between ultra high end real estate and crypto present a pretty irresistible attraction. Just something to consider when investor psychology toward crypto in general stinks.  

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

Rate this post:

Important for improving the service. Please add a comment in the comment field below explaining what you rated and why you gave it that rate. Failed Trade Recommendations should not be rated as that is considered a failure either way.
0 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 50 votes, average: 0.00 out of 5 (0 votes, average: 0.00 out of 5)
You need to be a registered member to rate this.
Loading...

4.4 stars on average, based on 97 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




Feedback or Requests?

Continue Reading

5 of 15 Seats Available

Learn more here.

Recent Comments

Recent Posts

A part of CCN

Hacked.com is Neutral and Unbiased

Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

Trending